Whether a liability for BPE's costs would follow as a matter of law from the trustee's adoption of the appeal

The Supreme Court handed down judgment on 17 June 2015 in BPE Solicitors and another v Gabriel [2015] UKSC 39. Lord Mance, Lord Sumption, Lord Carnwath, Lord Toulson and Lord Hodge heard the application for directions, before the hearing of the substantive appeal,

The court was tasked with the unique situation where the proceedings were begun against Mr Gabriel before he became bankrupt, and part of the costs was incurred before bankruptcy. The question is therefore whether Mr Hughes-Holland, the trustee in bankruptcy, was potentially liable for payment of costs in proceedings up until, and including, the hearing in the Court of Appeal.

In his judgment Lord Sumption said that in principle a trustee who adopts the action is a personal party to proceedings with the commencement of the bankruptcy vested in him personally; see section 306 of the Insolvency Act 1986. Owing to the specific facts however, namely that Mr Gabriel was party to proceedings before his bankruptcy, Mr Gabriel was found to be responsible for the entire conduct of the trial and appeal to the Court of Appeal. The liability under the costs order of the Court of Appeal is a provable debt of Mr Gabriel's and not of the trustee. Accordingly Lord Sumption dismissed Barneman v Wilson (1884) 28 Ch D 53, where the Court of Appeal extended the personal liability of the trustee to cover costs incurred by the other side before he adopted proceedings, as "no longer good law".

The mere fact that the trustee adopted the appeal could not justify the court to order him to pay the costs in the costs order. Mr Hughes-Holland adopted the appeal to the Supreme Court without adopting the proceedings below.

Declaration made that the trustee is not personally liable for any costs incurred by Mr Gabriel up to and including the order of the Court of Appeal dated 22 November 2013.

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